Wize AP Microeconomics Textbook > Elasticity
Perfectly Elastic and Inelastic
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Perfectly Elastic and Inelastic
Perfectly Inelastic
This means when price rises, quantity demanded does not change at all. The elasticity anywhere along this demand curve would be 0.
Example:
Medicine a patient needs to live (insulin for a diabetic).
Wize Tip
Perfectly inelastic demand curve looks like the letter "I" for Inelastic!
Perfectly Elastic
This means when price rises, quantity demanded falls by an infinite amount. The elasticity anywhere along this demand curve would be negative infinity.
Example:
Lettuce, wheat, gas at the gas station.
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Example: Steep and Flat Demand Curves
The demand for a luxury good will be ___________ than the demand for a necessity good.
A) steeper
B) flatter
C) the same as
D) steeper or flatter
B. Remember a luxury good (like a nice watch) is more elastic which means a flatter demand curve. Necessity goods (like water) are more inelastic which means steeper.
Practice: Steep and Flat Demand Curves
Let's say Barbara and Betty have two different demand curves. One of them is steeper than the other. Which of the following could explain the difference in slopes?